The orthodoxy of DePIN differs from other cryptos. In the crypto world, each public chain pursues orthodoxy, which serves as the initial driving force for development or the source of “faith,” allowing everything to be clear and well-founded. The role played by “orthodoxy,” from concept to practice and application, can be fully demonstrated in each process.

However, if we seek the orthodoxy of DePIN in this way, it seems that we cannot find it in Messari’s definition of DePIN. The main reason is that the attribute of “physical computing facilities” in the definition is too broad. Nevertheless, it is encouraging that we can still find universal logic in the diversified types of projects, which serves as the orthodoxy of DePIN.

In this article, we will attempt to explore the logical orthodoxy of DePIN and infer its structured development. We believe that with the help of “orthodoxy,” DePIN will bring some dynamics to crypto that were not originally part of this field.

The Current State Of DePIN

Today’s DePIN track combines many old tracks. After Messari proposed the concept, although it gave a vague definition based on the attributes of physical computing facilities, there are too many projects in this category in the market.

Firstly, storage and computing tracks can be counted. There are old storage projects like Filecoin, Storj, and Arweave. The nature of storage projects is unique, and most can directly transform into computing networks, forming a form similar to cloud services. This can be seen in the emergence of projects like 4everland and Sia. There is also a batch of old projects mainly targeting computing networks, such as iExec, Phala, and Akash, and even projects very sensitive to conceptual transformation, such as THETA, which is directly classified into this track under the concept of game cloud services.

Secondly, IoT projects can be counted because of their large numbers and extremely relevant attributes, they have almost become the mainstream of DePIN. Examples include old projects like IOTA, Helium, IoTeX, Livepeer, as well as new projects like Helium Mobile and Helium IOT.

Finally, new AI projects and projects with obvious DePIN characteristics can be counted. AI is one of the focal tracks in this cycle, and because it requires a large amount of computing power, it still needs the support of special computing equipment in network construction, hence being included in DePIN.

Whether it’s storage, computing, IoT, or AI, almost all are integrated into the DePIN track based on their attributes. So, what are the projects with obvious DePIN characteristics?

These projects emerged in response to market demand and their attributes almost entirely belong to the DePIN track. Prominent examples include W3bstream launched by IoTeX, as well as DePHY, incubated projects within the ecosystem like Wicrypt and WiFi Map, or those focusing on applications such as Hivemapper and IoTeX Pebble.

Among these related projects, W3bstream and DePHY belong to the “middleware” layer, while Wicrypt, WiFi Map, Hivemapper, and IoTeX Pebble belong to the application layer. Their emergence logic lies in the fact that the infrastructure at the chain level is already sufficient in terms of quantity, and for device data on-chain selection, besides building their own networks, the best choice is a direct connection. This necessitates the industry to meet this market demand, providing more B-end users with the fastest way to enter DePIN, thus the emergence of middleware roles based on the industrial middleware layer to provide solutions, tools, etc.

These new projects emerged entirely in response to industry demand and their attributes belong entirely to DePIN projects.

Upon investigating each project’s information, it can be seen that in the solutions provided by W3bstream and DePHY, W3bstream focuses on solving the part of device integration with the blockchain, while DePHY not only addresses the part of integration with the blockchain but also provides hardware solutions. Analysis suggests that the main reason is likely because IoTeX has already launched standardized hardware products and various hardware product data API tools, and services upstream of the supply chain, such as hardware manufacturing and integration solutions, which can be supplemented through investment in DePHY.

As for examples of application-side projects such as Wicrypt, Wifi Map, Hivemapper, and IoTeX Pebble, most of them are replicas of mature cases. For instance, IoTeX Pebble is a hardware device designed by IoTeX to address terminal data protection, which can be applied in many projects that utilize terminal devices to collect data. Wicrypt and Wifi Map are based on the successful experience of wireless networks, with the largest case being Helium.

So, compared to the form where Messari directly categorizes corresponding projects, some changes have occurred in the entire industry. Projects that appear entirely based on the needs of the DePIN industry have emerged, and the industry structure has also shifted from “chain + IoT network” to “chain + middleware + application,” reflecting changes in industry demand and indicating that DePIN has reached a crucial stage of development.

Furthermore, early-stage projects almost exclusively focused on Crypto. For example, projects like Filecoin and Storj only completed the infrastructure parts of the communication layer and resource layer without extensive development and adaptation to the application side. The overall goal of the network was to build a cryptocurrency network and make token economics the core operation, with users building mining machines to mine coins.

Now, however, such networks are already numerous, including storage networks after the rise of AI, distributed cloud computing networks, and distributed AI networks, with patterns almost identical from the network layer to the blockchain layer. Because of the high requirements of the network, such projects will still retain a design inertia, that is, they will have a very high cost of entry.

Therefore, many projects are facing the background of high network requirements, and the demand for “establishing DePIN projects” and “traditional smart device projects using blockchain” has become the main demand. This is also the main demand facing the industry growth stage. Fortunately, the existence of middleware and tool projects solves this demand. With the help of these roles, the application layer can release business possibilities.

The simplest understanding is that some projects in the ecosystem need to be prepared to meet the demand for new roles entering the track. This is the current state of DePIN.

Archaeology Concepts and Main Logic

In the current trends, DePIN will continue to develop and improve. Analyzing the overall structural development requires a macroscopic approach.

In the previous sections, we have described all mainstream project types. Based on Messari’s summary of the DePIN track, we can observe many project types, including computing, storage, AI, IoT, sensors, wireless, GPU, data, CDN, smart cities, geolocation, environment, and so on.

These tracks all conform to the definition of physical computing facilities in the DePIN concept. Each business in the supply chain will definitely use hardware devices, all of which will have computing capabilities. The different functionalities of hardware devices and computing capabilities will determine different network functions. Therefore, based on computing capabilities, we can infer the form of business and the logic after joining the blockchain.

Continuing along the concept of physical computing facilities, we arrive at the computing network of the Internet. In the early stages of Wyz Research’s article “How to Break Down Global Projects Using Technical Logic,” we wrote that the characteristics of public chains are the same as those of current cloud services, and the pattern of DePIN is also similar to that of cloud services.

After the Internet emerged, large network nodes supporting network operations, known as “servers,” were established. Servers were initially in the form of physical machines, and a large number of physical machines formed subsequent data centers, computing centers, supercomputing centers, and regional resource pools.

After the model of cloud services was promoted by AWS, the concept of the cloud became mainstream. Cloud platforms operating with computing centers continuously added various functions to the platform, so that the deployment based on the cloud platform and the integration with other tools became the main development and operation form.

In this development process, we can see the connection process:

Computing host (network component) — Cloud Platform — Developers

When integrated into cryptocurrency public chains, it becomes:

Node (network layer component) — Blockchain — Developers

Looking at the connection process of IoT devices under traditional technology conditions:

Device — Router/Internet — Management background/Server

After integrating into DePIN, the process becomes:

Computing device — Internet — Blockchain — Developers

Or:

Computing device — Middleware platform — Blockchain

Comparing the four processes, the mode of DePIN combined with blockchain is consistent with the logic of cloud service networks. The only difference is that due to different functions, two different connection and usage modes will be generated. Among them, those that lean towards providing infrastructure, such as old projects like Filecoin and new projects like Render, are accessed through specially required devices to provide storage and computing power sharing, consistent with the functions of cloud services. In addition, there is a mode that provides wireless bandwidth sharing at the remote end of the infrastructure (end of the network topology), such as Helium’s wireless sharing.

Another mode completes connection and data communication, rather than sharing computing power. For example, devices designed by IoTeX, such as Peddle, after connecting to the blockchain, become terminals representing users. Their devices no longer share computing power but transmit data back to the management end and on-chain, unleashing other capabilities on the blockchain. This is another way of accessing the application layer apart from infrastructure capabilities.

In these two product logics, the corresponding businesses are mining through shared computing power and mining through shared data. However, from a technical perspective, although both use the blockchain as a bookkeeping tool, the cloud service part records workload, and the data part records data sharing quantity, with the data sharing part also serving as an open gateway on the blockchain, hoping to introduce data into the public environment to achieve more value performance.

In summary, DePIN can derive its orthodoxy from the working models of the Internet cloud service and IoT. This orthodoxy is also the “functional orthodoxy” of public chain networks, which is to share resources (computing power, storage, bandwidth, data) in an open environment.

This is the orthodoxy of using functionality beyond the “financial orthodoxy” based on token in cryptocurrency. This is also why Messari indicates in the report that the future revenue of DePIN will be driven by utility rather than speculation.

Carving A Boat To Seek A Sword, Extending The Structure Of DePIN.

What kind of industry structure in the future can meet the needs of DePIN? The answer lies in: it can solve the problem of device connection from both cryptocurrency to the outside and from IoT to cryptocurrency, solving the chain and functionality problems. Once a project solves this problem, the industry structure may still follow the three-layer structure of infrastructure layer, middleware layer, and application layer, as well as the three mainstream trends of shared computing power, storage, bandwidth, cost reduction, and efficiency enhancement middleware, and diverse intelligent device applications.

According to Messari’s report statistics, there are over 650 DePIN projects. In the category statistics of Coingekco, there are about 79 tokens, and in IoTeX’s ecosystem statistics, there are approximately 65.

It can be said that the entire DePIN track has various types of old public chains, representing a nearly saturated L1 market. However, each DePIN project must build its mainnet (because it needs to handle device communication data and overall state). In the case of many basic chains, they will shift to the middleware and application layers.

This has led to the clear phenomenon we see, where there is an increase in DePIN projects that provide frameworks and solutions. Within the industry, such projects are regarded as tools for standardized replication.

In the examples mentioned earlier, W3bstream and DePHY are the main representatives. One project is launched by IoTeX, and the other is invested in by IoTeX. Both aim to reduce costs and quickly replicate standardized DePIN projects.

The entire process that can be completed after the combination of the two is:

1. Solve the design cost problem of computing devices.

2. Complete the connection between the hardware and the blockchain.

3. Solve the combination of on-chain businesses.

For the first issue, let’s take the example of DePHY’s solution.

When a device joins the network, the cost requirements for devices under different goals vary widely. The solutions are roughly divided into data communication/security data communication, bandwidth sharing, storage sharing, and computing power sharing. The cost ranges from hundreds of US dollars to tens of thousands of US dollars.

For example, when only a connection to a smart switch (non-secure environment) is required, it only needs to use a device’s universal access method to connect and collect data, without any other computing requirements, and the cost is the lowest.

When it comes to bandwidth sharing, for example, wireless sharing by Helium and WifiMap, specially designed devices are needed, and the cost comes to hundreds of dollars.

In terms of storage sharing and computing power-sharing, for example, the cost of mining machines for Filecoin reaches tens of thousands of dollars, and if long-term cloud services or GPUs are used, the continuous cost may be even higher. High costs mean high entry barriers. Therefore, for projects to enter DePIN, future growth is most likely to be concentrated in the second type of data sharing mentioned earlier. Currently, in order to provide data sharing, most devices require the installation of nodes to ensure data security. This is the lowest threshold but also raises the requirements for the simplest access devices.

By consulting DePHY’s open-source hardware solutions, it can be found that if encryption communication methods or communication modules such as TEE are used, the security of data communication for small devices can be improved, and low costs can be ensured. The cost of the simplest access device is about $10-15.

The second issue is the part of connecting to the blockchain.

Currently, projects in the industry have chosen to directly connect to different blockchain networks, but they still need to face situations such as device access, data collection, management, and subsequent overall state maintenance. This is where the role of the middleware layer comes in.

W3bstream and DePHY can both accomplish this part and provide developers with device access management. The principle is based on various modular tools and open-source tools, such as DID for device management. In terms of device connection, both use their own off-chain networks for device connection. In this part, they will play a “relay” role, connecting the overall state to various public chains to provide support for various businesses.

Although both projects show multiple networks in their solutions, they themselves will have a bias towards certain public chains. The reason is that the performance of public chains is also the key to providing the best user experience for DePIN. Therefore, they will tend to use public chains with higher concurrency capabilities, such as Solana.

The third issue is also the last step, which is to release business on the chain.

Apart from decentralization, the biggest advantage of blockchain is openness. The business of DePIN on the chain needs to unleash potential through cryptocurrency business.

What we currently see is that besides token-native business, only data services have developed well in the cryptocurrency field. The best scenario is the oracle, which provides price data needed for DeFi or other applications. The security requirements for data are very high.

In addition to data transmission, providing a data market for data transactions in the machine learning business in AI is also the most likely scenario in the future. What we see now, such as federated learning and deep learning, may be closely related to DePIN in the future. Unfortunately, there are still a few examples of business parts.

In the above three parts, it can be judged that the first two parts are perfect and can provide standardized processes for the emergence of projects. We see many projects born based on this model, such as EnviroBLOQ based on IoTeX’s Pebble, Dimo, Drife based on W3bstream, and Starpower, Apus based on DePHY.

Conclusion

Messari has consolidated DePIN into a relatively large track, but in terms of future volume, there is still a significant gap. Most predictions focus on this industry absorbing the value of the real world to achieve overall industry market value growth.

However, based on the current situation, the industry’s increment is not significant, which is also the main reason for the low market value. There is indeed a problem of high barriers within the industry. It may be that the cryptocurrency field does not understand the hardware industry, and the hardware industry cannot quickly enter the use of blockchain and cryptocurrency as tools. However, with the help of the middleware layer, growth is possible, and with the help of diverse applications in the middleware layer, entry is no longer difficult.

In the future, when DePIN brings the “orthodoxy” of business from the real world into the cryptocurrency world, DePIN projects will be able to compete with public chains. This is our greatest expectation for this track.

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